What is inflation

Inflation is the widespread and sustained increase in the prices of goods and services in an economy over a period of time. When inflation occurs, the purchasing power of money decreases, meaning that fewer goods and services can be bought with the same amount of money than before.

Governments and central banks try to keep inflation under control through fiscal and monetary policies. Moderate inflation is considered healthy in a growing economy, but when inflation is too high or too low, it can cause major economic problems.